For more than 9 years, Russia has been trying to destroy Ukraine's independence and our state. Tens of thousands of destroyed energy, utility, social and residential facilities are only the smallest part of the damage that the aggressor country has caused during the war. The lack of the necessary infrastructure for functioning and receiving basic services has extremely negative consequences for the economy and the lives of the population, and therefore its restoration and development has become one of the government's priorities.
How Ukraine plans to restore the destroyed infrastructure, what has already been done, what sources of funding are used, and why the role of partners in this process is so important - these and other issues were discussed in an interview with Ukrinform by Oleksandra Azarkhina, Deputy Minister of Community Development, Territories and Infrastructure of Ukraine.
AT LEAST $411 BILLION IS NEEDED TO RECONSTRUCT AND RESTORE UKRAINIAN INFRASTRUCTURE
- Russia's full-scale invasion has been going on for almost a year and a half. How much is the damage estimated, and what is the extent of the destruction?
- The World Bank, the European Commission, the United Nations, together with the Government of Ukraine, have conducted an independent assessment of the damage and the needs for the restoration of our country. In the first year of the full-scale war alone, the direct damage to Ukraine exceeded $135 billion. The total economic losses - those related to disruption of economic flows and production - and additional costs associated with the war reach $290 billion. In total, at least $411 billion is needed to reconstruct and restore Ukraine's infrastructure, but these figures have obviously increased significantly since February. In the short term, the country needs $14 billion. Funds are needed to restore energy, housing, critical and social infrastructure to provide basic services to the most vulnerable, demining and private sector development.
Today, we have almost 18,700 multi-storey residential buildings and over 144,000 private houses that have been damaged or destroyed as a result of Russian aggression. More than a third of the affected facilities - almost 1.4 million apartments and private houses - are beyond repair. At the same time, 8% of private and industrial facilities, including state-owned enterprises, have been completely destroyed. And this is only preliminary data from regional state (military) administrations, as the situation is changing almost every day. The Russians continue to destroy Ukraine's infrastructure.
THE LARGEST AMOUNT THAT CAN BE RECEIVED AS PART OF THE RECOVERY IS UAH 200 THOUSAND. UAH, THE AVERAGE PAYMENT IS NOW AT THE LEVEL OF 80-90 THOUSAND. UAH.
- In May, the government launched the eRestoration program. What are its results?
- Yes, on May 10, the first stage of the eRestoration project was launched. Now every citizen whose home was damaged as a result of the armed aggression of the Russian Federation can apply for state aid for minor repairs. This can be done through the Diia portal or through Administrative Service Centers (ASCs), social protection agencies, and notaries. A number of citizens, including those from Kyiv and Donetsk regions, have already received their first payments. In total, Ukrainians have submitted 19 thousand applications for compensation.
Local governments have also approved more than 50 applications for more than UAH 4.5 million. The largest amount that can be received is UAH 200,000, while the average payment is currently at the level of UAH 80-90,000. We have had discussions with international partners who have determined that this amount of assistance is the maximum for such a simplified, digitized procedure.
- Is the program to be financed only by the Fund?
- We are currently talking about using UAH 35 billion from the Liquidation Fund. It is preliminarily planned to allocate UAH 10 billion for the construction, repair and other engineering and technical measures to protect critical infrastructure, for a pilot project to restore settlements affected by armed aggression (UAH 5 billion), as well as for the implementation of projects by the Recovery Agency (UAH 3.6 billion) and critical infrastructure recovery projects at the community and regional levels (UAH 6.6 billion). Almost UAH 1 billion was allocated for the construction of engineering structures to provide water to the areas affected by the Kakhovka dam explosion. And UAH 4.4 billion is the resource of eRestoration. As you can see, the Fund is a flexible tool that allows the government, in agreement with the Verkhovna Rada Budget Committee, to respond quickly to the challenges of war, and at the same time to plan systematically where possible.
Of course, this resource is not enough to cover all the needs. That is why we are actively working with the World Bank, in particular, to get our partners to help fill the Fund with funds that we can then use their financial mechanism to provide people with compensation. Deputy Prime Minister Oleksandr Kubrakov has already agreed to raise USD 400 million. We are also discussing possible options with other international partners and donors. In the future, we plan to provide assistance under the eRestoration program through Russian reparations.
By the way, the first meeting of the Interagency Working Group to review proposals for the allocation of the Fund's resources has already taken place. We have reviewed 377 first projects with a funding amount of UAH 17.9 billion. They were submitted by local governments and central executive authorities. Some of the projects have already been selected and prioritized, and the government has approved their list.
- How many commissions have been set up to review applications?
- We currently have 444 commissions. It is planned that there will be 700. We have already seen "champions" among local governments who have managed to organize the quick work of the commissions and, accordingly, quick decisions to provide compensation to citizens directly to their bank accounts.
THE TASK IS TO GIVE UKRAINIANS THE OPPORTUNITY TO RECEIVE MONEY FOR WHAT RUSSIA HAS DESTROYED.
- Do you consider the possibility that these commissions may work in bad faith? What safeguards are in place to prevent corruption in this process?
- Our task is to give Ukrainians the opportunity to receive money for what Russia has destroyed. There are certain safeguards in place, but this is more about personal responsibility of people and local governments. We have digitalized the process as much as possible to avoid the influence of the human factor. Where it is present, we will introduce spot monitoring to detect violations. In particular, it will include verification of the objectivity of recording losses, the amount of assistance and the recovery process itself. At the initial stage, we will not be able to check absolutely everything, as this requires a large number of people. That is why we also provide citizens with the opportunity to file complaints if they notice any violations. It is noteworthy that the funds under the program can be spent exclusively on the purchase of construction materials and payment for work from vendors and contractors who have the appropriate codes to work.
- What is the next stage of eRestoration?
- For the time being, the program will operate in its current format. It is an integral element of the law on the mechanism of compensation for property damaged and destroyed by the war, which came into force on May 22. The document also defines the list of recipients of compensation, the types of such assistance, the mechanism for assessing and making decisions on its provision, and the possibility of using the funds to obtain new housing. For the Ministry, this is a more complicated but extremely important process, as it involves significant amounts of money and new approaches to helping Ukrainians. It is understood that we will be dealing with a large number of individual cases when providing funds, so we are already working on all possible options.
WE ARE WORKING ON A METHODOLOGY THAT WILL PROVIDE TRANSPARENT AND CLEAR RULES FOR SELECTING PROJECTS FOR RECONSTRUCTION AND PRIORITIZE THEIR IMPLEMENTATION
- The Ministry is currently preparing a methodology for prioritizing recovery projects. What are the results?
- Together with our partners, we are working on a methodology that will provide transparent and clear rules for selecting projects and prioritize their implementation. The basis of the document has already been developed. We will present it at the Ukraine Recovery Conference (URC) in London. We are currently using the methodology developed jointly with the RISE Ukraine Coalition of NGOs. Later, we will switch to a methodology developed with foreign partners with the participation of Ukrainian government institutions and civil society. It is important that it will be fully integrated into our digital ecosystem for managing the reconstruction of DREAM. We want to simplify and digitize the process of rebuilding Ukraine as much as possible.
The state and its partners have managed to restore more than 35,000 destroyed and damaged facilities
- What has been restored since the beginning of the great war?
- We are focusing our efforts on restoring critical infrastructure, logistics, housing and social facilities in 11 regions: Chernihiv, Sumy, Kherson, Mykolaiv, Zaporizhzhia, Kharkiv, Odesa, Dnipro, Donetsk, Zhytomyr and Kyiv oblasts. The main objective of the critical recovery is to provide community residents with living conditions and access to basic services.
In total, the government and its partners have managed to restore more than 35,000 facilities in all regions of Ukraine: almost 3,300 apartment buildings and 18,300 private houses; more than 2,800 life support facilities; more than 8,700 energy infrastructure facilities; 29 higher education institutions; 387 schools; 209 kindergartens; 313 healthcare and social protection facilities; 35 sports facilities; 165 cultural facilities; 145 administrative buildings (including ASCs); 185 local roads. These are preliminary statistics we have collected from the regions. More precise data will soon be available in the DREAM recovery management ecosystem.
- Regarding the DREAM platform. It was recently presented to journalists, when will it become fully operational?
- DREAM is a state electronic ecosystem that is a "one-stop shop" for all reconstruction projects. Communities can create their project ideas and projects, present them to international partners to attract financial resources, and manage the process of their implementation. It is very important for us to make this ecosystem as transparent and user-friendly as possible. We are now integrating other digital tools into it: The Register of Damaged and Destroyed Property (RDP); the Geographic Information System for Regional Development (GIS), which we plan to pilot by the end of the year; the Unified State Electronic System for Construction (USESC); the Sectoral Reconstruction Management System; the Prozorro system; and the single web portal for the use of public funds, Spending.gov.ua.
The system has already registered more than 6,000 reconstruction projects and project ideas. For example, the reconstruction of a hospital heating system in Chernihiv region (UAH 22.5 million), major repairs of a residential building in Kyiv region (UAH 47.5 million), and new construction of a water supply system in Khmelnytsky region (UAH 506 million). The number of projects is growing exponentially. On June 21, we plan to open data on all these projects within the URC and present all the features of the platform. In general, the full launch of all DREAM elements is expected in early 2024.
The prototype of DREAM was the internal unified information system E-ROAD, developed in 2021 to manage hundreds of road projects, as well as efficiency, accountability, and prevention of abuse. After analyzing it, my team and I realized that we needed a similar digital tool for the entire reconstruction. Thanks to the support of our partners - RISE Ukraine, Open Contracting Partnership, funded by the British government through the FCDO - we managed to launch its development very quickly and are already actively using it.
- In your opinion, how will this tool affect the international community's involvement in Ukraine's recovery?
- The main goal in developing the DREAM ecosystem was to create a platform that would help attract foreign investors. To show them all the available projects and the priority of their implementation, but, most importantly, with a simple and transparent mechanism. In this way, we give communities the opportunity to enter the international market and find new sources of funding. We will do our best to involve partners in the reconstruction.
ESTABLISHING COMMUNITY SUPPORT OFFICES TO HELP WITH DIRECT COMMUNICATION WITH DONORS AND PREPARATION OF RECOVERY PROJECTS
- There have been statements that some communities allegedly have difficulty writing projects and uploading them to the platform. Is that why the Ministry is launching the Community-led Inclusive Recovery (CLIR) initiative?
- Indeed, a significant number of communities, unfortunately, do not have the necessary resources, experience and expertise to interact with donors and implement externally funded infrastructure projects. That is why we are creating Community Support Offices. They will help communities on the ground with direct communication with donors and the preparation of recovery projects. We are currently looking for leading experts and specialists in this field to help increase the knowledge and skills of local community support teams, as well as to strengthen the institutional capacity of local governments.
- What other international institutions are you also actively working with?
- In fact, there are many of them. Among the main ones we are already implementing projects with are the European Investment Bank and the European Bank for Reconstruction and Development. We are also trying to advance our work with the Council of Europe Development Bank, which has funds available for Ukraine in the social sector - about EUR 100 million. The United States Agency for International Development (USAID) and the Japan International Cooperation Agency (JICA) are also helping us a lot. By the way, since the beginning of the year, Ukraine and Japan have reached an agreement to provide more than USD 600 million for the reconstruction. And this is not the final result.
- The Parliament passed in the first reading the draft law No. 9165, which will allow Ukrainians to choose projects to be financed by the State Fund for Regional Development (SFRD). When is the second reading expected?
Previously, people had no choice at all, and we want to give them the opportunity to choose and shape regional policy
- It is a real challenge for the Ministry to get this draft law passed, as it eliminates a significant corruption component. The previous rules for the distribution of funds from the SFRD took into account the population in the region and the gross regional product, and were actually dependent on the political component. Any MP could not always ethically "promote" their own project or not support another, because 50% of the commission members who approved them were members of the budget committee. Therefore, it turned out that sometimes the projects were exclusively PR, and did not contribute to the economic development of the region. We propose a concept using the tool of direct democracy - voting for projects directly by citizens in Diia. This is right because people should be responsible for the development of their own communities. Not everyone likes this decision now, so there is resistance.
If the document is adopted, 50% of the fund's UAH 2 billion allocated in the SFRD in 2023 will be distributed equally among all regions, and the remaining 50% will be additionally distributed equally among the 11 regions most affected by the hostilities. Central and local executive authorities and local governments will be able to submit projects for implementation at the expense of the SFRD through a specialized platform, after which regional commissions will conduct a preliminary assessment. It will be based on a point system, with projects from small towns with a population of up to 50,000 people receiving an additional point. The projects that score at least 25 points will be transferred to the commission of the Ministry of Recovery, which will check them for compliance with the law and submit them for an open poll in Diia. Based on the results of the survey, lists of winning projects will be compiled and submitted to the government for allocation of funds.
Currently, we are most criticized for the fact that projects from the largest cities will have preferences, and therefore they will receive all the funds. But there is an important detail here: voting will take place within the region, so every Ukrainian will be able to choose the option that suits them best, not just a single city. Also, funding will be provided not only for one project, but also for those that have enough funds and are included in the national ranking. Let me remind you that before, people had no choice at all, and we want to give them the opportunity to choose and shape the region's policy. We hope that the draft law will be considered by the Parliament in the near future, possibly by the end of the month. If the document is rejected, the funds will be allocated to the Armed Forces of Ukraine or the Fund for the Elimination of the Consequences of Armed Aggression.